On August 2, the foreign exchange reserves of India tested a historical high of USD 675 billion, clearly underlining strong fundamentals of the country's external sector, stated RBI Governor Shaktikanta Das. He exuded confidence that such a huge quantum of funds will easily meet the needs of New Delhi's external financing.
Das also pointed out that there is a declining trend of CAD to 0.7% of GDP in 2023-24 from 2.0% in 2022-23 by the support of the lower trade deficit, solid performances of services, and remittances.
On the other hand, the trade deficit widened in the first quarter of 2024-25 amid outpacing of imports against exports. However, Das expects that services exports and remittances inflows will keep the CAD within manageable limits in the same period.
He further stated that the period from June to August 6 had already witnessed $9.7 billion net inflows; this was particularly after having seen outflows of $4.2 billion in the previous two months of April and May.
Net FDI flows increased twofold to $ 7.1 billion in April-May 2024-25 from $ 3.4 billion a year ago due to lower repatriation. External commercial borrowings moderated during April-June 2024-25, while non-resident deposits recorded higher net inflows during April-May compared to the previous year, Das added.
Read also | SIP vs FD: Which is better for higher returns?
Read also | Income Tax Processing Time Slashed in Decade, Signaling Major Shift: FM
